Svyazinvest suspends a merge with MegaFon

Company cancels negotiations as deal is put on hold until next year.

Dow Jones Newswires reports that Russian state telecoms holding group Svazyzinvest has suspended negotiations on a proposal to combine the mobile businesses of its regional telecoms divisions with the country's third largest cellular operator MegaFon. A Svyazinvest spokeswoman said that the company is no longer negotiating with MegaFon and the proposal is on hold until next year.

A Svyazinvest spokeswoman said Friday the company is no longer negotiating with Megafon and the proposal is on hold until next year.

The proposal was made by management consultants McKinsey, who recommended that the mobile businesses be combined as part of a broader restructuring of Svyazinvest's assets, most of which are in the fixed-line sector.

Earlier this year the idea was discussed by Svyazinvest, Russia's communications ministry and Megafon's largest Russian shareholder, the metals tycoon Alisher Usmanov, but it would have been hard for the government to fund any acquisition of Megafon, which most analysts value at over $15 billion.

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